Samsung Shares Sink 8.7% Despite Record 110 Trillion Won Shareholder Return

* Editor's note: AI PRISM (Personalized Report & Insight Summarizing Media) is an AI-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six tailored news items by reader type.

1. Blocked by Financial Structure Law's 10% Rule, Samsung Leans Toward Dividends Over Buybacks

- Key Summary: Despite announcing its largest-ever shareholder return plan, Samsung Electronics closed down 8.70% at 257,000 won. At a board meeting on the 21st, Samsung Electronics approved a shareholder return plan of 90 trillion to 110 trillion won for this year and decided to pay 30 trillion won in cash dividends during the third quarter, but it plans to decide in January next year how to execute the remaining 60 trillion to 80 trillion won. A constraint arose because Samsung Life Insurance (032830.KS) and Samsung Fire & Marine Insurance (000810.KS) together hold about 10% of Samsung Electronics common shares, meaning that canceling common shares would exceed the limit under Article 24 of the Financial Structure Improvement Act. Accordingly, brokerages estimate share buybacks and cancellations at 10 trillion to 20 trillion won and dividends at 50 trillion to 60 trillion won.

2. Won and Bonds Strengthen Ahead of Rate Meeting; Citi Sees More Government Bonds Next Year

- Key Summary: The won closed at 1,382.4 per dollar, down 4.1 won from the previous session, after falling to as low as 1,376.5 during the day. Despite wariness ahead of the Bank of Korea's Monetary Policy Board meeting on the 27th, strong net buying of government bond futures by foreign investors pushed yields lower across all maturities, with the three-year government bond at 3.836% and the 10-year at 4.335%. Analysts said that if the won's strength continues, inflationary pressure through import prices would ease, giving the central bank more room to maneuver on monetary policy. Citi also raised its forecasts for total government bond issuance in 2026 and 2027 to 221 trillion won and 211 trillion won, respectively, above its previous estimates, projecting limited room for a decline in bond supply.

3. Chip Exports, Hawkish BOK and Corporate Demand: The Three-Way Combination Behind the Won's Strength

- Key Summary: From July 1 to August 21, the won appreciated 11.90% against the dollar, ranking first among the currencies surveyed. Given that the second-ranked Norwegian krone rose 6.03% and the Japanese yen 2.31%, analysts said the won's strength was distinct and hard to explain by a broad dollar weakness alone. The current account surplus reached $191 billion in the first half, and dollar selling in spot and forward transactions by non-financial private companies in the second quarter amounted to $263.59 billion, a surge of 71.5% from a year earlier. In addition, in a Seoul Economic Daily survey, 13 of 20 experts projected an additional 0.25 percentage point increase at the Monetary Policy Board meeting on the 27th, with monetary policy also supporting the won's strength.

4. Rates Rise and the Won Falls, but Bank Stocks Languish

- Key Summary: Over the five trading days from the 18th to the 24th, the shares of the four major financial groups all declined, with Woori Financial Group falling 5.33%, and the KRX financial index dropped 4.72%. Over the same period, foreign investors net sold a total of 150.398 billion won worth of the four major financial groups. Rising market rates typically lead to an improvement in net interest margin (NIM), and a falling exchange rate also reduces the burden of foreign-currency translation losses, but concerns over weaker earnings from a decline in third-quarter brokerage trading value amid a range-bound KOSPI weighed on investor sentiment. Still, some forecasts suggested that if gradual rate increases are accompanied by an economic recovery, interest income growth could be expected.

5. KOSDAQ Active ETFs Trim Biotech and Concentrate on Chip Materials and Equipment

- Key Summary: Samsung Active Asset Management's KoAct KOSDAQ Active and Timefolio Asset Management's TIME KOSDAQ Active raised their weightings in materials, parts and equipment to 62.72% and 52.11%, respectively, based on closing prices on the 21st. In addition, DS Asset Management's DS KOSDAQ Active filled all 33 of its holdings with materials, parts and equipment names. The top pick among the three funds' managers was Tes, with an average weighting of 5.88%, followed by Simmtech (222800.KQ) and PSK Holdings (031980.KQ). Also, about 19.2 billion won flowed net into the three products over the past month, showing money returning to active ETFs after a slump.

6. Kyobo Life Hybrid Securities Draw 446 Billion Won in Demand Forecast

- Key Summary: Kyobo Life Insurance secured a total of 446 billion won in orders in a demand forecast for a 300 billion won hybrid securities offering. As it left room to increase the size to as much as 500 billion won, the final issuance is expected to be decided between 300 billion and 400 billion won, and within the target rate band of 4.80% to 5.40%, the final rate for a 300 billion won issuance is projected at 5.35%. Domestic credit rating agencies rated the Kyobo Life hybrid securities AA0 with a stable outlook, and its first-half consolidated operating profit and net profit came to 975.9 billion won and 729.1 billion won, up 23% and 22% respectively from a year earlier. Kyobo Life plans to use the proceeds to stabilize its Korean Insurance Capital Standard (K-ICS) ratio.